Will security in Pakistan affect IFAD’ support to the country?

Recent events in Pakistan rightly rose concerns on the extent to which the current security situation in the country could affect the implementation of IFAD funded projects.

Obviously ‘security’ is a factor beyond the control of IFAD, and as such it represents one of the (exogenous) risks for working in Pakistan.

However, it should be noted that - with the exception of one project whose unexpected and exceptional increased insecurity in the project area prevented proper monitoring - IFAD has always been able to adequately supervise both physical progresses and fiduciary aspects of its funded projects in Pakistan.

This does not guarantee per se that the situation may not change in the future, but it highlights the fact that in principle the security situation in Pakistan should not significantly affect IFAD’s capacity to continue its support to this country.

Should Pakistan’s current macroeconomic situation justify IFIs to withdraw their support to the country?

The current macroeconomic situation in Pakistan, where, according to recent estimates, the total debt would constitute about 60% of the GDP, raised concerns on the likelihood of Pakistan to repay its loans, and, consequently, on whether International Financing Institutions should continue lending to this country.

Contrarily to this position, we are of the opinion that investing in poverty reduction could contribute to macroeconomic stabilization, and that investing in activities that target the poor would contribute to reduce the vulnerability of the most vulnerable segments of society to the effects of macroeconomic instability.

We believe that the challenges that Pakistan is facing at the moment are actually an argument to continue the support to this country, not to withdraw it.